OBJECTIVE: This study assessed costs among patients with bipolar disorder for treatment related to bipolar disorder and to comorbid conditions. Risk factors associated with costs were also assessed. METHODS: Data (January 1998 to December 2002) were from a seven-state Medicaid managed care claims database for 13,471 patients who had received a diagnosis of bipolar disorder, most of whom received medications. Each medical claims cost was adjusted by the medical component of the Consumer Price Index as the dollar value in 2002. In a Poisson regression analysis, treatment costs per enrollment month were regressed on patient's age, gender, medications, and clinical comorbidities. RESULTS: Bipolar disorder treatment accounted for 30% of costs and comorbid disorders for 70%. Key cost components were inpatient care (35%), outpatient care (16%), prescriptions (13%), and physician encounters (11%). Patients with bipolar disorder received a variety of medications: lithium, 13%; anticonvulsants, 35%; second-generation antipsychotics, 24%; first-generation antipsychotics, 22%; and antidepressants, 42%. Compared with the costs for patients receiving antidepressants alone or no medication, the high costs for bipolar disorder treatment and overall treatment were associated with use of second-generation antipsychotics (rate ratio [RR]=1.71, 95% confidence interval [CI]=1.58-1.86 and RR=1.26, CI=1.18-1.34, respectively) and use of anticonvulsants (RR=1.37, CI=1.26-1.48 and RR=1.06, CI=1.00-1.12). Higher costs were significantly associated with key comorbidities, such as drug abuse (RR=1.58, CI=1.47-1.70), cerebral-vascular disease (RR=1.72, CI=1.51-1.94), ischemic heart disease (RR=1.47, CI=1.30-1.66), and hypertension (RR=1.44, CI=1.33-1.56). CONCLUSIONS: Cost-containment efforts may need to manage or prevent key comorbidities among patients with bipolar disorder and to evaluate the association between antipsychotic use and treatment outcomes and hospital services.